Member sentiment boost for APRA funds

Australian Prudential Regulation Authority superannuation funds have seen better cash flows than expected in 2014, especially among industry funds, according to Tria Investment Partners.

The increase in cash flows come as member contributions jumped significantly in 2014, rising by about 50 per cent in the industry funds segment, while other segments saw smaller but substantial jumps.

Net inflows rose by about 20 per cent for industry funds, which is an extra $3 billion. Tria said that while this was noteworthy in itself, the fact that around half of it came from member contributions was striking.

Based on anecdotal evidence, Tria found the improved sentiment came as members were comforted by the Coalition's policy not to tinker with the super system too much.

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Also, as more people inch closer to retirement, they are realising that their savings are insufficient and are trying to boost their accounts. Good returns since the global financial crisis and cyclical improvement in 2013 also helped.

"Member contributions are generally discretionary, so they are a proxy for whether members are confident about their super and whether they see it as attractive. If members feel negative about super, as a group they will reduce their voluntary contributions and just rely on their compulsory employer contributions, Tria said.

Tria also noted that member contributions usually rise on the back of incentives like one-off tax changes, which makes it more appealing to transfer huge amounts of money into super. But there were no special factors in 2014.

The boost in sentiment meant an extra $4-5 billion went into super compared to 2013.